Photographer: Ty Wright/Bloomberg

The gas industry’s pipeline problem, an exploding threat

May 2, 2016 Mark Drajem

The First Word Energy team draws on Bloomberg’s worldwide resources to cover all aspects of energy policy. Learn how Bloomberg Government can help your energy lobbying or policy analysis—contact Peter Hsu at or 202-416-3035.

Today’s Agenda

Remember flaming faucets?  A resident igniting the water coming out of his tap in Josh Fox’s “Gasland” has been the enduring image for those fighting fracking for years. That seems quaint now after natural gas from one of the nation’s most important pipelines leaked and exploded into a fireball hundreds of feet in the air. Residents of the area said they could feel shocks from the blast as far as six miles away. Friday’s conflagration, in a rural area near Pittsburgh, injured a man and caused Spectra Energy to shut the 36-inch Texas Eastern pipeline, which brings gas from western Pennsylvania to the Northeast.

Notwithstanding the call by Bernie Sanders to ban fracking,  criticisms of the practice have subtly shifted. The chants and posters don’t highlight the threat of secret chemicals seeping into water supplies, as they did when fracking first took off. In its place are fights over pipelines and earthquakes. And those could turn out to be more trouble for drillers. In recent days, New York denied a permit for Williams’ Constitution pipeline, twin protests in New York were aimed at getting the state to block the Pilgrim Pipeline, and Pennsylvania opened an investigation into earthquakes near a fracking site. With natural gas in the western Marcellus trading at a steep discount because of the bottlenecks in getting it to the markets in the Northeast, pipeline issues are only going to grow in importance. State officials facing political pressure can scuttle a pipeline project with their signature on the “no” line of just one environmental review.

Still, it’s not all overcast for the gas industry. As today’s chart shows, gas demand from utilities keeps increasing, and there’s no sign in the data that’s going to abate. And, a scientific advisory board to the EPA is dialing back its criticisms of the agency’s landmark study of water pollution. EPA had concluded there was no evidence of “widespread, systemic impacts.” The scientists had initially suggested eliminating that phrase altogether, but now may say EPA should “consider including possible modifying adjectives” before it. Those recommendations still need to be voted on by the full scientific advisory board.

Vox investigates how fracking became a dirty word:  “Fracking sounds ominous, like ‘whack’ or ‘smack.’ For protestors focused on air and water pollution, ‘fracking’ hits the right undertones. As in, no fracking way. Indeed, many in the oil and gas industry wish the media would quit using the shorthand,” Vox’s Brad Plumer writes.

The fight between utilities and solar developers may be headed toward detente.  Pinnacle West Capital Corp.’s Arizona Public Service, the state’s largest utility, and panel installerSolarCity Corp. have agreed to drop dueling state ballot initiatives and negotiate in “good faith” on the issue of net metering, through which solar panel owners get bill credits for feeding their excess power to the power grid, Arizona has been a flash point in the debate over how utilities should accommodate the proliferation of rooftop solar panels, which have become increasingly affordable as the cost of equipment drops and companies offer no-money-down leasing plans, Mark Chediak and Chris Martin report. Utilities including Arizona Public Service have proposed higher fees and smaller credits for home solar users to cover grid maintenance. The negotiations in Arizona follow an agreement struck between solar installers and utilities in New York earlier this month. Read the full story, here.

Also today,  Rep. John Shimkus discusses his bid to be chairman of House Energy and Commerce; coal-magnate Robert Murray is profiled by The New York Times; Halliburton and Baker Hughes are calling the whole thing off; and the EPA pays $1 million to those harmed by its Gold King Mine spill — but critics say that’s not nearly enough.

Drajem’s Don’t Miss

The Climate Hustle, Marc Morano’s film that skewers those he calls “climate alarmists,” is having a one-night-only showing in theaters across the country today. Morano argues the weather events aren’t as grim as the mainstream media would lead one to believe — and that climate change is a means for a green elite to reorder the global economy. For a schedule of film showings, click here.


“This allows us to get off the Hill, which I think is important, get away from the office, socialize, and we’re all paying about equal. It’s a nice place but we’ve just got borrowed furniture, so it’s like a college environment, like a room of people at a college apartment. It works,” Rep. John Shimkus describing the townhouse he shares with Steve Scalise, Kevin Brady and Eric Paulson. (See the Power Profile for more from Shimkus.)

Week Ahead

Energy Week Ahead: Explosion Adds Urgency to PHMSA Discussion

Marie Therese Dominguez, the PHMSA administrator, already had a long list of critics arguing the agency wasn’t doing enough to keep the nation’s pipelines safe — and that was before Friday’s explosion at a gas pipeline in rural Pennsylvania that sent a fireball hundreds of feet in the air and injured one nearby resident.

This week Dominguez gets a chance to lay out how the regulator is going to tackle its considerable workload: getting long-overdue regulations out the door, responding to an upcoming rewrite of the PHMSA authorization legislation and investigating the explosion near Pittsburgh. She will sit down at the Center for Strategic and International Studies Tuesday to discuss what she’s doing to restore lawmakers’ and residents’ faith in the regulator.

“It will be really challenging,” said Sarah Ladislaw, the CSIS senior fellow who will interview Dominguez. “They have struggled mightily to be able to keep up with industry. It’s going to be hard to make sure they to get the resources they need.”

Last year, Congress funded 109 new positions at the agency, increasing the size of its pipeline safety program by nearly 50 percent. But recent accidents such the Plains All American Pipeline spill off the coast of Santa Barbara have fueled complaints that PHMSA is understaffed. It has failed to meet the deadline for 16 regulations that Congress had set out in its last reauthorization. In recent months Dominguez has outlined a new vision for the agency’s future. By 2021, she’s told lawmakers, she wants to roll out new safety management systems like those used in the aviation industry, restructure the agency so it can better prevent accidents and engage more meaningfully with the public.

The event is at 11 a.m. at the Center for Strategic and International Studies, 1616 Rhode Island Ave.

Also Worth Watching:

USEA Public Forum: ExxonMobil CEO Rex Tillerson joins NRC Chairman Stephen Burns and DOE’s Melanie Kenderdine are at the United States Energy Association’s Public Policy Forum Thursday. That’s at 11 a.m. at the National Press Club.

Transatlantic Energy: The Atlantic Council holds a discussion on the outcomes of the EU-U.S. Energy Council. The event will feature Amos Hochstein, special envoy at the U.S. Department of State and Dominique Ristori, director general for energy at the European Commission. The energy council focus on global and regional energy security challenges: climate change, energy efficiency, research and technologies. The event is Thursday at 2 p.m. at 1030 15th St.

Sage-Grouse Saga: The Environmental Law Institute will hold a discussion on “eco-pragmatism” and state conservation efforts related to the Endangered Species Act. Assistant Director for Endangered Species USFWS Gary Frazer, Center for Biological Diversity’s endangered species policy director Brett Hartl and API Counsel Matt Haynie will participate. That’s on Wednesday at noon.

Contact Us

Send us your comments, tips and a reminder about what the sun looks like. Shoot us an e-mail: Mark Drajem is the editor ( or @drajem), Catherine Traywick ( or @ctraywick) and Laura Curtis ( or @LouKCurtis) cover Congress and regulation.Bloomberg Government subscribers can get this and any of our eight other newsletters in their inbox every morning. Click here to modify your subscriptions. Contact Peter Hsu at 202-416-3035 or for more information or if you have colleagues that would also value access.

Chart of the Day

Coal vs. Natural Gas  

This chart by Bernard Chen of Bloomberg Intelligence shows that the market trends for natural gas are improving. (More from Chen on gas and coal tomorrow.)

Inside the Beltway

EPA Pays $1 Million to Communities Hurt by Gold King Spill   The funding is in addition to $2 million the EPA has allocated for monitoring and spring runoff preparedness, the agency said. EPA has received or is reviewing another $711,805 in other funding requests from states and counties affected by the August 2015 spill, in which EPA investigators triggered the release of some 3 million gallons of mining wastewater and sediment into a river in southwestern Colorado. Despite that, local elected officials were joined by members of Congress in complaining that the funding fell far short of what was sought of the EPA.

NRDC Criticizes Industry-Backed Nuclear Bills in the House   The nuclear industry voiced support in a House hearing for two bills on advanced nuclear reactors and changing the Nuclear Regulatory Commission’s fee structure, while the Natural Resources Defense Council criticized portions of both bills, Rebecca Kern reported.

Summit Power Project Unlikely to be Finished: IG   A $3.9 billion carbon capture and sequestration project partially funded by the Energy Department is unlikely to be completed, the department’s inspector general said in a report released April 29.

Environmental Groups Appeal Decision on Power Plant Data   Three environmental groups asked the U.S. Court of Appeals for the District of Columbia Circuit in a petition filed today to review a lower court’s decision holding that the Clean Water Act doesn’t exempt EPA from withholding information obtained through a survey, Amena Saiyid reported.

Outside the Beltway

Oklahoma Regulators Give Nod to OG&E’s $500M Coal Scrubber Plan: The Oklahoman   Persistence paid off for Oklahoma Gas and Electric Co. as regulators gave approval las week to the utility’s third attempt for a $500 million coal scrubber project to deal with tougher emissions regulations. The Oklahoma Corporation Commission voted 2-0 that the project was “reasonable,” with Commissioners Bob Anthony and Todd Hiett voting for the order. Commissioner Dana Murphy didn’t sign the order but said she concurred with the result. Murphy didn’t agree with some of the legal interpretations in the order.The final order tried to thread the needle on costs, which will come back to the commission in a future rate case once the scrubber project is put in service by fall 2018. OG&E faces a January 2019 deadline to comply with federal regional haze regulations.

Divided Vermont High Court Debates Local, State Say on Solar: AP   A sharply divided Vermont Supreme Court has sided with the developers of a major solar power project in Rutland Town and against the town and neighbors. The court upheld a ruling by the state Public Service Board that gave the project a green light. The town and neighbors objected that the Rutland Renewable Energy project would have undue aesthetic and historic impacts and use prime agricultural land. They also sought to use an addendum to the town plan to slow the project or scale it back.

First Energy Plan for Pleasants Plant Draws Opposition: Charleston Gazette-Mail   Opponents are lining up against First Energy’s suspected plan of selling the Pleasants Power Station near St. Marys to MonPower and Potomac Edison, the company’s West Virginia subsidiaries. In the past week, First Energy, the electric utility that supplies power to the northern half of West Virginia, has seemed to tip its hand on multiple occasions by disclosing that the company may seek to offload the coal-fired Pleasants plant, shifting the cost and risk of that facility from company shareholders to West Virginia customers.

Dominion Makes Case for Moving Forward on Nuclear: AP   Dominion Virginia Power is defending its heavy spending on a potential new nuclear power plant, one the company may not actually build and could cost more than $19 billion to complete. The state’s largest electric utility said in new filings with Virginia regulators Friday that the option of building a third unit at its North Anna site “is of great value” for customers because of the uncertain future of federal carbon emission rules. But the company also said that same uncertainty was causing it to slow down spending on the project in the short term and push back a possible completion date by a year, to 2029.

Maine House Fails to Override Veto of Solar Bill   The Maine House of Representatives came up two votes short April 29 of overriding the governor’s veto of a bill to build a bigger solar base in the state, Bloomberg BNA’s Adrianne Appel reports. Solar proponents had clogged the halls of the statehouse to lobby for the legislation (L.D. 1649) to boost solar generation in Maine, which is dead last in solar installation in the Northeast. The bill had passed the House on April 14 by a 91-56 vote and by a unanimous 35-0 vote in the Senate, but it was vetoed by Gov. Paul LePage (R) on April 27. The House vote to override the veto was 96-52, two votes short of what was needed.

Oil, Gas and Coal

Halliburton, Baker Hughes Called Off $28 Billion Merger   Halliburton Co. and Baker Hughes Inc. are calling off their $28 billion merger, which has met stiff antitrust resistance from regulators in the U.S. and Europe, according to Matthew Monks and David Wethe. The companies, the second- and third-largest oil-service firms, may announce as soon as Monday morning that they have terminated the combination.

Ultra Petroleum Files for Bankruptcy, Citing $3.9 Billion Debt   Ultra Petroleum Corp. is the latest oil and gas explorer to fall victim to the prolonged slump in energy prices. Ultra listed $1.3 billion in assets and $3.9 billion in debt in court papers filed in Houston on Friday. The Houston-based company has 159 employees and its main assets are gas-producing properties in Wyoming, as well as some assets in Pennsylvania and crude oil properties in Utah, according to court papers.

Guerrillas And Rebels Do for Oil Market What Producers Couldn’t   Leftist guerrillas in Colombia, rebels in Libya and militants in Nigeria are succeeding where the world’s biggest oil producers failed, helping keep a 1.5 million-barrel crude surplus from expanding. While Saudi Arabia, Russia and other major producers couldn’t agree on a production freeze earlier this month, disruptions ranging from pipeline attacks to field shutdowns have taken 800,000 barrels a day of crude supply offline this year, according to energy-industry consultant FGE.

T. Boone Pickens says U.S. Oil Industry “Dead in the Water”: Washington Post   T. Boone Pickens turns 88 years old in a few weeks. He is in the process of giving his personal fortune to charity and will joke, when asked about investments he’s eyeing and trends he’s worrying about, about projects that might come online when he hits 138. “I’m only interested in energy,” he said last week before dinner at Bistro 8½ in Manhattan, where he addressed a gathering of conservative economic enthusiasts, “and there’s some good stuff out there.”

Oil Field Responsible for Ethane Uptick: AP   An oil and natural gas field in the western United States is largely responsible for a global uptick of the air pollutant ethane, according to a new study. The team led by researchers at the University of Michigan found that fossil fuel production at the Bakken Formation in North Dakota and Montana is emitting roughly 2 percent of the ethane detected in the Earth’s atmosphere, the Associated Press reported. Along with its chemical cousin methane, ethane is a hydrocarbon that is a significant component of natural gas. Once in the atmosphere, ethane reacts with sunlight to form ozone.

Tanker With Disputed Libyan Oil Returns to Country for Unloading   A tanker with oil from eastern Libya returned with its cargo to the North African country after the United Nations blacklisted the shipment, amid an escalating struggle between the nation’s rival governments for control of its crude wealth.The Distya Ameya will discharge its cargo at the refinery of Zawiya in western Libya over the next few days, Mustafa Sanalla, chairman of the Tripoli-based National Oil Corp., said Saturday in an e-mailed statement. Unloading at Zawiya was delayed.